Frank Smors, a self-described "small stockholder" of T. Rowe Price Associates Inc., summed up the mood among the mutual fund company's shareholders who attended yesterday's annual meeting:
"I'd like to say you guys are doing a terrific job -- keep it up," he told the company's officers.
Despite a shaky year for the stock and bond markets last year, T. Rowe Price turned in a record performance: record revenues, earnings, assets under management, even a record stock price.
Accordingly, the company's management earned record pay: Each of the top four officers earned a $1.25 million bonus last year on top of salary and other compensation that ranged from $297,500 to $347,500, the latter for President and Chief Executive Officer George J. Collins.
But while earnings are expected to increase this year, Chief Financial Officer George A. Roche warned the shareholders not to expect last year's torrid pace to continue.
"We believe at this point that revenues will increase modestly in the first quarter and that earnings will show a gain on the order of 10 percent over the prior year first quarter," Mr. Roche said.
That means that when the company releases earnings later this month, the first-quarter profits should come in just over $15 million, down from $16.1 million in the fourth quarter. That compares with $13.75 million a year ago, when earnings jumped almost 35 percent from the previous year.
Mr. Roche also said that assets under management at the end of the quarter will exceed the $57.8 billion recorded at year-end. The company's mutual funds had about $900 million in first-quarter net cash flow, which is new investments minus shareholder redemptions.
Along with a vote to re-elect the board of directors, the stockholders yesterday agreed to increase the number of authorized common shares to 100 million from 48 million. Only 28.6 million shares were outstanding at the end of last year.
They also voted, by a narrow margin, to create a class of preferred stock and to authorize 20 million shares. The preferred would be used for general corporate purposes, including possible acquisitions.
With the stock market up solidly this year, and investor sentiment along with it, prospects are good for continued growth, Mr. Roche said. The economy has slowed from its record pace at the end of last year, but it remains strong, as do corporate profits; the Federal Reserve Board has declined to raise interest rates lately; and the Congress has gotten more serious about attacking the deficit, Mr. Roche explained.
But "the weakening of the dollar should eventually add to inflationary pressures," he added, and the recent international currency and derivatives crises "could trigger a market correction" if they occur again.
So far, the market's ups and downs haven't hurt the company's stock. In fact, takeover speculation about the securities industry in general helped push Price to its all-time high of $38.625 in the past two weeks. It closed yesterday at $38.375, up 12.5 cents.
In response to a shareholder's question, Mr. Collins stressed the company's preference to go it alone.
"We like this business . . . and we're going to stay independent," he said.